The rent-to-own, home-collected credit and catalogue credit sectors could also face a crackdown after the body “identified particular concerns”.

However, the payday loans market, much criticised for leaving vulnerable borrowers with excessive debts, is to escape further action.

The FCA’s review said the sector has delivered “substantial benefits” to consumers, adding that 760,000 borrowers are saving a total of £150 million per year.

Following the introduction of a price cap, firms are “much less likely to lend to customers who cannot afford to repay” and debt charities are seeing fewer clients with debt problems linked to payday loans.

Mr Bailey said: “We are pleased to see clear evidence of improvement in the payday lending market after a period when firms’ treatment of customers and their business models were often unacceptable.”